If so, what would happen to all the clinical laboratories affiliated with and servicing those hospitals? And how might hospital-based medical laboratories that are absorbed into larger healthcare networks be required to alter their workflows? For almost three decades, the clinical laboratory profession has seen similar hospital acquisitions lead to consolidation, standardization, and regionalization of the medical laboratories inside these hospitals. Often these organizational restructurings mean layoffs of lab managers and medical technologists.

Probably the more serious challenge is what will happen to
all the rural patients who cannot get to larger health networks located in
urban settings.

Kaiser Health News (KHN) reported in August that more than 100 rural hospitals closed since 2010, and these closures have serious implications for patients, such as a lengthy transport to another hospital’s emergency department.

Rural hospitals usually do not have many nearby competitors. So, what brings so many of them to the brink of closure? According to a Navigant (NYSE:NCI)) analysis of more than 2,000 rural hospitals, “21% are at high risk of closing based on their total operating margin, days cash-on-hand, and debt-to-capitalization ratio. This equates to 430 hospitals across 43 states that employ 150,000 people!”

Navigant identifies the following as factors in the decline
of these struggling rural hospitals:

“Low rural population growth;

“Payer mix degradation;

“Excess hospital capacity due to declining
inpatient care; and

“An inability for hospitals to leverage
technology due to lack of capital.”

Navigant goes on to state, “Further review of the community
essentiality (trauma status, service to vulnerable populations, geographic
isolation, economic impact) of rural hospitals at high financial risk suggests
64% or 277 of these hospitals are considered highly essential to their
community’s health and economic well-being. In 31 states, at least half of
these financially distressed rural hospitals are considered essential.”

“We show that two in three of these hospitals are considered highly essential to their communities: that’s 277 hospitals nationwide,” wrote David Mosley, Navigant’s Managing Director, in a STAT blog post. “Furthermore, if these hospitals close, already fragile rural economies will crumble while residents will be forced to travel long distances for emergency and inpatient care.”

Fierce Healthcare noted that “Of Montana’s 12 at-risk rural hospitals, all of them are considered essential to their communities. Kansas has 29 total at-risk rural hospitals with 25 of them—or 86%—considered essential to their communities. Georgia and Mississippi have seen 77% and 61% of their essential rural hospitals at financial risk, respectively.”

Navigant’s list of states with the highest percentage of
rural hospitals at risk of closing includes:

Alabama: 21 hospitals (50%)

Mississippi: 31 hospitals (48%)

Georgia: 26 hospitals (41%)

Maine: eight hospitals (40%)

Alaska: six hospitals (40%)

Arkansas: 18 hospitals (37%)

Oklahoma: 17 hospitals (29%)

Kansas: 29 hospitals (29%)

Michigan:18 hospitals (25%)

Kentucky: 16 hospitals (25%)

Minnesota: 19 hospitals (21%)

Comparing Independent Hospitals to Health Networks

But it’s not just rural independent hospitals that are
struggling. Modern
Healthcare Metrics reports that 53% of all stand-alone hospitals in the US
have suffered operating losses during each of the last five years (2012 to
2017). Conversely, about half (26%) of health system-affiliated providers have
lost money.

Statistics compiled by the American Hospital Association (AHA) show there are approximately 5,000 non-federal acute care community hospitals in the US. In 2017, about 75% of them were part of multi-hospital systems, an increase from 70.4% in 2012, Modern Healthcare Metrics data indicated.

Change is coming to parts of the nation that depend on
independent hospitals, and it’s not good. Medical laboratory leaders are
advised to prepare for serving patients who may lose access to nearby tests and
diagnostic services. On a positive note, medical laboratories in independent
hospitals that consolidate with healthcare systems could bring expertise,
adding value to their new networks.